Friday, February 10, 2012

"The Mystery Monk Making Billions With 5-Hour Energy"

From Forbes:

Manoj Bhargava. Photo by Eric Eggley.

This story appears in the Feb. 27 edition of Forbes magazine.

In one corner of Manoj Bhargava’s office is a cemetery of sorts. It’s
a Formica bookcase, its shelves lined with hundreds of garishly colored
screw-top plastic bottles not much taller than shot glasses. Front and
center is a Cadillac-red bottle of 5-Hour Energy, the two-ounce caffeine
and vitamin elixir that purports to keep you alert without crashing. In
eight years 5-Hour has gone from nowhere to $1 billion in retail sales.
Truckers swear by it. So do the traders in Oliver Stone’s 2010 sequel
to Wall Street. So do hungover ­students. It’s $3 a bottle, and it has made Bhargava a fortune.

His company, Living Essentials, is the biggest player by far in the
­energy-shot market, and not because 5-Hour is so delicious. Chalky
cough syrup is more like it. The reason Bhargava has won is that he
plays tough. Sitting in that cemetery are a dozen or so neon copycats
with names like 6-Hour Power and 8-Hour Energy. Each has been sued,
bullied or kicked off the market by Living Essentials’ lawyers. In front
of each are little placards with a skull and crossbones drawn in
felt-tip pen. Bhargava points at the gravestone of one of his late
competitors and says with a chuckle, “Rest in peace.”

The privately held Living Essentials doesn’t report revenue or
profits, but a source with knowledge of its financials says the company
grossed north of $600 million last year on that $1 billion at retail.
The source says the company netted about $300 million. Checkout scan
data from research firm SymphonyIRI say that 5-Hour has 90% of the
energy-shot market. Its closest competitor, NVE Pharmaceuticals’ Stacker
brand, has just over 3%....MORE